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MR. DAVID GREGORY: This Sunday: A Christmas scare in the skies. A man claiming ties to al-Qaeda tries to detonate explosives on a U.S.-bound flight. The White House calls it an attempted act of terrorism. Was this part of a larger plot, and will there be new rules for air travel?

Then, the Senate delivers a sweeping healthcare reform bill.

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PRES. BARACK OBAMA: These are not small reforms, these are big reforms.

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MR. GREGORY: But Republicans are not giving up.

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SEN. MITCH McCONNELL (R-KY): This fight isn't over. In fact, this fight is long from over.

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MR. GREGORY: But it's far from a done deal. Obstacles remain over how to reconcile this bill with the House version, given deep differences over issues like the public option. And how will achieving a key campaign promise affect the president's political standing as his first year in office draws to a close? With us, White House press secretary Robert Gibbs.
Then America, the next decade. Just days before the new year, a special discussion: Where does the country stand, and where are we headed? The economy, America's role in the world, and political leadership after a tumultuous start to the 21st century. Our guests: mayor of New York City, Michael Bloomberg; former House Speaker, Republican Newt Gingrich; governor of Massachusetts, Democrat Deval Patrick; and NBC's chief foreign affairs correspondent, Andrea Mitchell.

But first, good morning, live from Lexington, Kentucky, where I'm spending some time over the holidays with family. And while families around the nation celebrated Christmas on Friday, we came very close to coping with tragedy as a deadly act of terror was attempted on board a U.S. airliner. Yesterday, federal officials charged 23-year-old Nigerian Umar Farouk Abdulmutallab with trying to destroy Northwest Delta Flight 253 bound from Amsterdam to Detroit. And joining us now live from San Francisco for the very latest on the investigation in the situation is the secretary of Homeland Security, Janet Napolitano.

Secretary Napolitano, good morning and welcome back to MEET THE PRESS. Let me start by asking you, the suspect allegedly was carrying a compound on his body of PETN. That was the same chemical compound that the "Shoe Bomber," Richard Reid, had on him some eight years ago. The fact that he had this very same compound, does this, to you, represent a failure of security to detect?

SEC'Y JANET NAPOLITANO: Well, I think we don't know enough to say one way or the other in that respect. The forensics are still being done, the investigation is still underway. I think the important point here is that once the incident occurred, everybody reacted the way they should; the passengers did, the flight crew did. And literally, within an hour, additional measures had been instituted not only on the ground here in the United States, but abroad and, indeed, on the 128 flights that were already in the air from Europe.

MR. GREGORY: Is this suspect a part of al-Qaeda?

SEC'Y NAPOLITANO: Again, we don't know. There's allegations that have been made public in the criminal complaint, but the FBI now has that matter. It's under investigation and we shall see. What we are looking at is literally how he got on the plane, to make sure that the screening procedures were followed; and if they were followed, whether they need to be changed. And then, again, making sure that on the ground the, the air environment remains a safe environment, which indeed it is.

MR. GREGORY: Let me just clarify, though. Is your suspicion, based on intelligence you're seeing and information that he's providing, is your suspicion that he is part of al-Qaeda?

SEC'Y NAPOLITANO: You know, David, I, I, I don't want to speculate on that. Again, the, the FBI has that under investigation. We'll ascertain whether or not he is what he, he allegedly says he is. But what we are focused on, again, is screening, making sure that mitigation measures are in place at airports across the country. And one thing I would say to the traveling public over this holiday season as they return home is to get to the airport a little bit earlier, because there will be some additional measures, and to say we, we won't do the same thing at every airport, because one of the things we try not to be is predictable in this regard. So if you see screeners at one airport doing one thing but not doing it at another, at another airport, that's not because anybody's doing anything wrong. Indeed, they're following our protocols.

MR. GREGORY: Based on what you know so far, in terms of how much and what he had in his possession in terms of explosives, was it sufficient to bring down the plane had he succeeded?

SEC'Y NAPOLITANO: Oh, I think we're far from knowing that. The forensics as to what he actually had have yet to be complete. And stepping back from this case, what it takes to actually bring down an airliner depends not only on the chemical and the amount, but where a person is on the plane, how it's detonated, all sorts of questions on that score. So the minute he began setting himself on fire, which is what it, it looked like, the passengers acted quickly. And indeed, that's part of what I keep saying, is security is everybody's responsibility. The passengers and the flight crew deserve our praise, and the system went into full alert mode leaning forward, literally, within, within a, within minutes, an hour of the incident occurring in the air.

MR. GREGORY: Right. But, Secretary Napolitano, the question is whether the system really did do everything that it should have done. He was on a terror watch list. His father had raised concerns about him being radicalized to the U.S. Embassy in Nigeria. He was not on a do not fly list, which is a, a separate kind of cataloguing of threats. Do you think the fact that he was on a watch list should have triggered a secondary screening in the airport in Amsterdam?

SEC'Y NAPOLITANO: Well, this is the way it works. He was on a TIDE list. There are over a half a million people on that TIDE list, and that information was shared throughout the federal family. There's no question about information sharing here. There had never been any additional information supplied that would move him to what's called a Selectee List, where you are--where you do that kind of secondary screening, or indeed to the No-Fly List, which requires specific, credible, derogatory information. Now, I think one of the things we will do--because that's a system that has been in place for a number of years. One of the things we will do is go back and look and say, well, maybe in this day and age, with the kind of environment we have, we should change some of those protocols. But right now he, he was on a, a generic list, if I could use that phrase, but we did not have the kind of information that under the current rules would elevate him.

MR. GREGORY: Final question, Madame Secretary. Given this incident, given an attempt to use an airplane as a weapon yet again, what does it say about the nature of the threat that terrorists generally, but more specifically al-Qaeda, if that's in fact the case, still poses to the United States?

SEC'Y NAPOLITANO: Well, I think, stepping back from this case, what we see is that al-Qaeda remains a source of threat streams to the, to the world and indeed to the United States. And while this case does not appear specifically connected there, that leadership, that organization, that training, much of it emanates from the Afghanistan-Pakistan area. And indeed, that is, that is why al-Qaeda and going after al-Qaeda is such an important part of the president's Afghanistan strategy.

MR. GREGORY: All right, Secretary Napolitano, I know your time is limited this morning as you're getting back to Washington. Thank you very much for being with us.
Joining us now, White House press secretary Robert Gibbs. He's live from the White House this morning.

Robert, good morning. Welcome back to MEET THE PRESS. The president, of course, is vacationing with family on this holiday weekend in Hawaii, and I know that he's been kept abreast of developments as they've occurred over the past several days. What's his priority now in terms of what he would like to know, what kind of accountability he would like to see as a result of this?

MR. ROBERT GIBBS: Well, David, as you mentioned, he's been briefed very regularly by national security staffers that are with him in Hawaii and has been involved with conference calls to and from the Situation Room since we first learned of this incident on Christmas Day. I'd say the two priorities that the president has right now, first and foremost, ensuring the safety and security of the American people and doing everything that we can and continue to do everything that we can to make sure that that's happening. And secondly, David, he's asked for two different reviews to be conducted, which you heard Secretary Napolitano mention. First, digging into this listing--the listing procedures that she talked about, figuring out if the information that the U.S. government had was used properly. But also, to go back and look at the protocols for how listing is done that, as the secretary mentioned, in some cases there are several years old, and ensure that we're using all the information that we have properly. She mentioned a list of 550,000 people. There's a smaller list of 400,000 people of which this Selectee List that you mentioned, and the No Fly List, are drawn from. Those two lists encompass about 18,000 people. So you can see there are a series of database universes that list people that are of some concern to several agencies across the government. We want to ensure that information sharing is always happening as it should. And I think secondly, a review to ensure and figure out why a, an individual with the chemical explosive that he had on him could get onto an airliner in Amsterdam and fly into this country. So a listing review and a detection capabilities review so that we can look, going forward, about what has happened now in the past.

MR. GREGORY: There, there's obviously an investigation that's ongoing. But just as after 9/11, then President Bush's national security team knew that, that the attack had the feel and the look of an al-Qaeda attack. To, to the president's national security team, does it feel the same way here?

MR. GIBBS: Well, David, I don't want to get into classified intelligence matters. I think pretty quickly the White House determined, and we told many in the media and you all reported, that we believe this was a potential terrorist attack that, that could have occurred. The president certainly has taken steps in his time in office to reorient our priorities as it comes to fighting that war on terror. We're drawing down in Iraq and focusing, as the secretary said, on Pakistan and Afghanistan, the place where the attacks of 9/11 originated and where people sit in caves and in houses today planning more attacks in this country, using all elements of American power in places not just like Pakistan, but throughout the world in places like Yemen and Somalia. And you've seen already leaders from al-Qaeda and other terrorist organizations in Pakistan, Yemen and Somalia that have been targeted and eliminated. We've increased our capabilities...

MR. GREGORY: Right.

MR. GIBBS: ...and our information sharing, and we want to do the same throughout the federal government.

I would say lastly, David, I think going forward, the president believes strongly that this has to be a nonpartisan issue. This should not be a tug-of-war between the two political parties. I hope that, that, that everyone will resolve in the new year to make protecting our nation a nonpartisan issue rather than what normally happens in Washington, and that is devolving into politics.

MR. GREGORY: Final point on this. Is there any intelligence or information to indicate this was part of a larger plot?

MR. GIBBS: David, I don't want to get into some of that intelligence, except to say this, that immediately security procedures were reviewed, as the secretary said, capabilities were strengthened at screening facilities in this country and throughout the world. We added air marshals to flights coming in and out of this country. So certainly, steps were taken to assume and plan for the very worst in order to prevent anything from happening in this country.

MR. GREGORY: Robert, let me turn, if I can, to a couple of other matters in our remaining moments...

MR. GIBBS: Sure.

MR. GREGORY: ...the first being health care. The president achieved a major legislative success with healthcare reform passing the Senate this week. Now comes the tricky task of reconciling the Senate bill with the House bill, and there are differences. There's a public option in the House bill, not in the Senate bill; there's the question of different taxes, there's the restrictions on abortion. What will the president's priorities be as he approaches this attempt to reconcile theses two pieces of legislation?

MR. GIBBS: Well, first and foremost, David, I think the president would tell you that what he sees in each of these bills is, in many cases, virtually identical. The major parts of healthcare reform that the president sought to have enacted as a candidate are now very close to happening, and he thinks the commonalty between the two proposals overlaps quite a bit. Obviously, he'll be involved with House and Senate leaders in working through the last remaining details that have to be ironed out. But as I said earlier this week, and I think the president believes strongly, healthcare reform in this country is not a matter of if, it's now just a matter of when. People will have access to affordable insurance. People with insurance won't be discriminated against because of a pre-existing condition. We'll take some tough steps to ensure that insurance companies aren't using the money that's gotten from your premiums to pad their profits, but instead to provide much-needed medical care. I think the American people are on the verge of a very big win in healthcare reform in the--early in the next year.

MR. GREGORY: Let me just, let me just try to pin you down on a couple of, of points of dispute. First of all, on taxes, the president indicated earlier in the year that he would not demand on this--demand a surtax on wealthy Americans in the House bill. But this excise tax that's on so-called Cadillac plans in the Senate bill, which are more generous healthcare benefits that a lot of union members have, is the president committed to keeping that in the legislation?

MR. GIBBS: Well, the president is committed to working out fairness and ensuring that--again, understand that that is not a tax on a worker or an individual, that's an attacks on--that's a tax on an insurance company that provides a plan that, quite frankly, many would deem is far too generous. The best way to bend that cost curve is to go after and work on eliminating excessive Cadillac plans that people at Goldman Sachs and big bankers might get. That's what the focus will be in this. I think the president believes that we can work out a solution. And what's important in this is, David, the bill that the president has proposed and the bill that he will sign will be paid for and it will reduce the deficit, two things that haven't been said in this town in quite a long time.

MR. GREGORY: Let me ask you about the economy, as there's a focus on getting people back to work. Here in Kentucky, like the national average, unemployment's at 10.6 percent. Here in Kentucky, you've got state budget shortfalls...

MR. GIBBS: Sure.

MR. GREGORY: ...that may require $800 million-plus in spending cuts. In California, that shortfall is in the billions of dollars and there's actually been a request from California for some federal aid.

MR. GREGORY: Will that be something that the, the administration will consider, providing help to these cash-strapped states?

MR. GIBBS: Well, David, understand that cash is--help for cash-strapped states has already come from the federal government in the form of the recovery act. I certainly hope that you'll ask all of your guests today that may or may not represent Kentucky where they are in making sure that cash-strap--cash-strapped states, excuse me, have the resources that they need. We provided immediate assistance to ensure that health care was funded in these states, and also to ensure that fire and police and teachers could remain on the job. That's where we've seen a lot of jobs saved as a result of the recovery act. The president will focus like a laser beam in the next year, as he has this year, in getting our economy back on track. We've made tremendous strides; we've got a long way to go. When the president took office, that January we lost 741,000 jobs. Just last month that number was whittled down to only 11,000 jobs. But this president, David, isn't going to rest until we begin to create jobs, see that unemployment rate come down and put people who want to work back to work...

MR. GREGORY: All right.

MR. GIBBS: ...providing for their families.

MR. GREGORY: All right, Robert Gibbs, happy holidays to you. Thank you for being with us this Sunday.

MR. GIBBS: David, happy holidays. And to all your viewers, a happy new year.

MR. GREGORY: Thank you.

Coming up next, earlier this week back in Washington we sat down for a special discussion: America, the next decade. Mayor Michael Bloomberg of New York, former House Speaker Newt Gingrich, Governor Deval Patrick and NBC's chief foreign correspondent, Andrea Mitchell. It's coming up, only here on MEET THE PRESS.

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MR. GREGORY: America, the next decade; a special discussion after this brief commercial break.

MR. GREGORY: We are back and joined now by the governor of Massachusetts, Deval Patrick; former Speaker of the House Newt Gingrich; Mayor Mike Bloomberg of New York City, of course; and chief foreign affairs correspondent, our own Andrea Mitchell of NBC News.
Happy new year to everybody. Happy holidays.

GOV. DEVAL PATRICK (D-MA): Happy holidays to you.

MS. ANDREA MITCHELL: And to you.

MR. GREGORY: This is a special discussion, a chance to talk about America, the next decade, and where the country is, where we're headed. But let's talk about where we are right now, which is that this country, because of the Obama administration, is on the brink of achieving pretty sweeping healthcare reform.

Governor Patrick, as an ally of this White House and a governor yourself, what do you think the president has achieved here?

GOV. PATRICK: Well, you know, it's very familiar to us, because it's, it's very much framed around an experiment that we've had under way in Massachusetts now for three years. And there are 97.5 percent of our population now covered with affordable, accessible health care. We still have to get the cough--cost curve bent, and we've started down that path with a payment reform, moving away from fee for service to fee for outcome, quality control and so forth. But I think this is huge, and I think it does reflect this notion that, that health is a public good and good for us as Americans.

REP. GINGRICH: And not much support in the country at large. Well, you've got $513 billion in tax increases, $470 billion in Medicare cuts. You have a scale of, I think, bribery in the Senate we have not seen in our lifetime, with various senators getting all sorts of special deals in a way that I think the public is just appalled by. I suspect every Republican running in '10 and again in '12 will run on an absolute pledge to repeal this bill. The bill--most of the bill does not go into effect until '13 or '14, except on the tax increase side; and therefore, I think there won't be any great constituency for it. And I think it'll be a major campaign theme. This is a bad bill, written in a horrible way, and the most, the most corrupt legislation I've seen in my lifetime.

MR. GREGORY: Andrea Mitchell, the, the politics of this are, are fascinating. You've heard from the widow of Ted Kennedy, Senator Kennedy, Vicki Kennedy, saying this is a bill he would support. Thirty million Americans will be covered here. There will be major insurance reforms. And yet, as Speaker Gingrich points out, there are moderate Democrats who know they are going to be in a tough spot politically for supporting this bill when you get to a midterm election next year.

MS. MITCHELL: I think the politics are going to be very, very tough for a lot of Democrats, because the benefits are down the road. No matter how it becomes compromised in the long run, the benefits will be 2013, 2014, most of the perceivable benefits. And the costs are up front. Now, I think that that, that the White House has to frame this as expansion of coverage, 31 million more Americans.

MR. GREGORY: Mm-hmm.

MS. MITCHELL: And eliminating those insurance burdens. The, the lack of access to insurance coverage for children with pre-existing conditions, that's what they have to focus on. But if you look in the nitty-gritty of this bill, the unintended consequences and the fact that no one can really guarantee those cost benefits. What the CBO has done in its projections is assume...

MR. GREGORY: Congressional Budget Office, they sort of score all of this.

MS. MITCHELL: Congressional Budget Office scored this by assuming...

MR. GREGORY: Right.

MS. MITCHELL: ...all of the improvements that are written into the bill. But those have to first be worked out in the real world.

MR. GREGORY: Well, let, let's talk about the status quo, Mayor Bloomberg. Something you've thought a lot about is how much do we spend on individuals in this country for health care, and what's the result on the other side? What's life expectancy? And let's just put these numbers up here, because they're pretty striking. The United States spends more than most other countries, by a whole lot, $7,200-plus per individual. And yet, the life expectancy is 78, far younger than countries that spend far less per person.

MAYOR MICHAEL BLOOMBERG (I): Well, we're unwilling to ask the question, what we're getting for our money? And I think both sides of that graph you just showed really talk about it. We are spending more than we can afford. We will go bankrupt if we keep increasing medical costs at the rate we've been doing it. And life expectancy, arguably the primary purpose of government is to increase life expectancy, and we are not doing that. Instead, we talk about other things, some laudable, some desperately that we have to do. And I will say, I've given the president a lot of credit for taking on the issue; but it's Congress that's writing this legislation, and they are not willing to go near the things that will contain costs, which is immigration reform, tort reform, asking the question of whether or not we can afford certain tests and whether they really are cost beneficial. And we are not willing to work on the preventive things, fighting obesity, smoking, those kinds of things, or crime in the streets, which is another big influence on our life expectancy. But we're just not willing to talk those tough issues.

MR. GREGORY: Governor Patrick, what are the hard choices that government is going to have to make in order to really reform health care?

GOV. PATRICK: Yes.

MR. GREGORY: Not just healthcare insurance.

GOV. PATRICK: Right. Yeah.

MR. GREGORY: Which is to say, to really bend that cost curve, which is really not anticipated here in the first 10 years of this new bill. We are going to cover so many more people, which, which a lot of people think is a moral responsibility of government.
GOV. PATRICK: Yes. Yes.

MR. GREGORY: But how do we actually make hard choices?

GOV. PATRICK: Well, I think, I think the mayor is on to some of these points already. The chronic illnesses that, that are responsible for 70 or 80 percent of, of healthcare costs, and how the--how health is managed, not just the management of health insurance. I think the whole question of fee for service, which is a tradition in our healthcare system for, for decades and decades, where we pay for the amount of service and those 15-minute visits rather than healthy outcomes and a medical home is a, I think, the jargon that's now being, now being used. There are issues around the number of tests, very sensitive choices that individuals and families, and expectations that we all have about our ability to get any test for anything in the best hospital in world--in the world at any time we want.

REP. GINGRICH: Here's the great tragedy. The greatest health systems in the United States are cheaper than bad health care. The fact is, the Mayo Clinic, in its cost structure, or if you go to the, the Gundersen Lutheran Hospital in La Crosse, Wisconsin, which is a similar system, Marshfield Clinic, all in the upper Midwest, we know how to have better health outcomes at lower costs.

MR. GREGORY: The, the...

REP. GINGRICH: But, but by the way, it's a fundamentally different approach than just--than this fighting over insurance and payment system.

MAYOR BLOOMBERG: You know, if you really want to object to something in this bill, number one, I have asked congressperson after congressperson, not one can explain to me what's in the bill, even in the House version. Certainly not in the other version. And so for them to vote on a bill that they don't understand whatsoever, really, you got to question how--what kind of government we have. Number two, when they talk about bending the curve, as, as the governor said, bending the curve is a flimflam euphemism for increasing costs, but we're going to say we'll do it at slightly lower rate than we would have otherwise.

MAYOR BLOOMBERG: I understand that. But they are not talking about reducing costs, they're talking about chancing the first derivative.

MR. GREGORY: Slowing it, right.

MAYOR BLOOMBERG: Slowing the growth down. And when you look at where the cost savings are going to be, well, they're going to cut something out of Medicare and Medicaid. Now, anybody that runs for office will tell you, you don't do that.

MR. GREGORY: Right.

MAYOR BLOOMBERG: I mean, the bottom line is it's so politically explosive, it really would be a first time in the history of the world if they ever cut anything out of either of those two programs.

MR. GREGORY: But, you know, Speaker Gingrich, your old--your one-time nemesis President Clinton says healthcare reform becomes more popular after it gets passed; and therefore, Republicans, by not being on board at all in this process, could face some real political trouble ahead.

REP. GINGRICH: Look, I, I think the more important this is, as the mayor said, the country faces real trouble. The country is going to face deficits it can't sustain, debt it can't fund, an economy that's noncompetitive and, and I think--I believe everything we're doing right now will be fundamentally revisited. But, but I, I want to emphasize what the mayor said, because it's so important. When you start writing 2,000-page bills, you guarantee that no elected official knows what's in the legislation. It is a fundamentally flawed way of running this country. It's flawed in both parties. And I think part of why you're seeing the tea party movement and other behavior is, is that people are just angry about an irresponsible government imposing change that no elected official can understand.

MR. GREGORY: Let's talk about sentiment on--just a few days away from a new year, from a new decade. And think back 10 years ago, partying like it's 1999, literally in 1999. This is what it looked like, the dawn of a new century. And, you know, revelers you see on Times Square and around the country were, were filled with this hope of "What is the world going to be like? Where is America headed?" And yet, there was also this sense of dread about Y2K computer problems or worse. And yet, who could imagine that 9/11 was coming in 2001.
Andrea Mitchell, here we are now on, on the brink of a new decade. How are we thinking about this new decade compared to where we were a decade ago?

MS. MITCHELL: I think 9/11 so transformed our sense of ourselves. It made us feel vulnerable. We lost privacy. We gave up a lot of privacy over the years. We don't even know to the extent how much our privacy was invaded by government. We can debate the merits of that. But we also lost a lot of the sense of American possibilities. And we were then wrapped in, in a decade of war, two wars.

MS. MITCHELL: And I think as we proceed and look at this next decade, we have less to spend. We have fewer opportunities, really, abroad and at home, and bigger responsibilities. And I think that's the sense of limitations that has been imposed upon us by the obligations of the last decade.

MR. GREGORY: Governor Patrick, here was the, the cover of Time magazine earlier this month, talking about the decade that's passed: "The Decade From Hell: And why the next one will be better." Talk about a decade of, of broken dreams. Is that how you see this decade that's passed?

GOV. PATRICK: No. Listen, I'm a, I'm a, I'm a kid from welfare from the south side of Chicago. And as my grandmother would say, look at me now. Look at us all now. This country still has the most extraordinary record and, and, I think, forecast of opportunity for, for individuals. But I do think the next decade is, will be and should be a decade of innovation in everything: in our economy; in our, in our health care, as we've been talking about; and in energy; in government, for that matter. And the wonderful thing, one sort of upside of a period of relative scarcity, is that we have to think about doing things differently. And that's the sort of thing we've been emphasizing in Massachusetts. It's making a difference, and I think making a stronger foundation for us to lift the whole commonwealth.

MR. GREGORY: Well, one big area to talk about, of course, is the economy, which is a huge focus right now and will be for the coming decade as we talk about the economy and beyond. Mayor Bloomberg, are we in recovery?

MAYOR BLOOMBERG: Well, the economy has certainly turned around. It's stopped going down and it's slowly coming back, and it'll be a long time before we get to where we were three years ago. But you talk about the last decade, and, and Andrea brought up 9/11 as sort of the defining moment of that decade. There are two things that we did not work on and, in fact, one have gone the wrong direction during the last decade, which will dictate the economy for the next decade, and that's immigration and education.

MS. MITCHELL: Mm-hmm.

MAYOR BLOOMBERG: And education--and Newt's been out there campaigning around the country. The president says it's number one priority for him, he's got Arne Duncan, who's a great secretary of Education, working on it. But unless we give our young people the kind of education to compete in the global world, we cannot survive.
GOV. PATRICK: Here, here.

MAYOR BLOOMBERG: Certainly can't survive with the, with the kind of jobs we want, with the benefits we want for our people.
And immigration, we're committing what I call national suicide. Somehow or other, after 9/11 we went from reaching out and trying to get the best and the brightest to come here, to trying to keep them out. In fact, we do the stupidest thing, we give them educations and then don't give them green cards.

GOV. PATRICK: Here, here.

MAYOR BLOOMBERG: And industry is moving, but industries of the future--we talk about green. Nobody really knows what that means. The industries of the future are going overseas, and it'll be almost impossible to get them back.

REP. GINGRICH: The mayor put his finger on, on something fundamental. I, I think we have been through--we will look back on this decade as a decade of self-deception. You could've put up the World Trade Center, which was there New Year's. We've been lying to ourselves about how hard the problem is. We're now beginning to see in Fort Hood, in, in, in Detroit, in Denver, in New York, in five kids in Pakistan, this is a much more profound problem than we've talked about. You look at the bubbles. You had, you had the I.T. bubble right at the end of the last decade, then you had the housing bubble in '07, then you had the Wall Street bubble. The fourth bubble's going to be government. We have far more government than we're going to afford if we're going to compete in the world market.

MR. GREGORY: As we, as we talk about the larger piece here about the economy and about jobs, if this economy is fundamentally in, in recovery, Andrea, there's still the question of where the jobs are and when they're coming back; which will be something that not just dominates politically 2010 for this president, but indeed, this decade ahead. What, what does a jobs picture look like, even when they start returning?

MS. MITCHELL: The jobs will, first of all, not be the same kind of jobs, and that links to both immigration and to education.

MR. GREGORY: Yeah.

MS. MITCHELL: What the speaker and the mayor have talked about, the kinds of jobs that people have to be retrained to. And not everyone will be able to be retrained. There are going to be some really horrible personal tragedies here, because not everyone is going to be able to adapt.

MR. GREGORY: Governor, jobs.

GOV. PATRICK: And it--well, first of all, education is about jobs. Our kids in Massachusetts score are top in the nation for three years in a row on the national report card, the NAEP scores, third in the world in math and science. And that is about a, a trajectory of innovation that has gone on for a decade and a half and that we have to take to the next level. And it has to expand to include those 21st century skills, which are about teamwork and cooperation and, and so on, the things that make a difference in how we compete in a global economy. So I think that's key.

MR. GREGORY: We're still talking about the, the economy more broadly, and I want to show something that Jeffrey Immelt--who is the CEO, of course, of General Electric, the parent of NBC--said about this, this era of business leadership on Wall Street that's coming to a close. This is what he said. "We're at the end of a difficult generation of business leadership. ... Tough-mindedness, a good trait, was replaced by meanness and greed, both terrible traits. ... Rewards became perverted. The richest people made the most mistakes with the least accountability." Mayor Bloomberg, has that era ended? Is Wall Street a different place?

MAYOR BLOOMBERG: I don't know that Wall Street's a different place, but what's happened in this country from an economic point of view is we went through another one of these cycles. And we keep forgetting that we've been through this again and again and again. We slowly build, we go to excess, it gets corrected overnight, we yell and scream, gnash our teeth, swear never again and then we start the same cycle. The markets will work, and anybody that thinks they can hold back the markets is just making a mistake. We live in a global world. We don't control the whole world. We cannot write regulation that's inconsistent with the rest of the world, because things will move around. The governor talked about education being jobs. Education is crime on our streets, education is our tax base.

MR. GREGORY: Mm-hmm.

MAYOR BLOOMBERG: You know, we have--everybody is bashing Wall Street. That is one of the big revenue generators for New York and New York City. That's how we pay our teachers, that's how we pay our cops, that's how we pay our firefighters. And I've always thought, if the elected officials in Michigan bashed the automobile industry, or in California, I.T., or in Texas, oil, they'd be run out of town on a rail. And yet, every day I pick up the paper and everybody, it's kind of hard to find anybody that's not saying--well, look, there are some excesses. But overall, most of the people that work in finance make $70,000, $80,000 a year, they're hardworking, and we want those industries to be here and not overseas.

MR. GREGORY: Let me talk about more broadly, from the economy to the U.S. role in the world both from a national security standpoint, but also in terms U.S. power here and how it's projected around the world. And I thought this poll from our recent NBC News/Wall Street Journal poll was interesting, about who people thought the biggest power would be in 20 years from now. And look at those numbers. Now, 39 percent say it's China; in '95, that was just 3 percent. Only 37 percent think it's the United States.
Speaker Gingrich, is America a power in decline?

REP. GINGRICH: No. I think that what the, what the mayor said is exactly where we are. We are at a down cycle, based on a variety of mistakes. We are, we are the most self-correcting society in the world. And I agree with what the governor said. You know, people in America have risen from all sorts of wonderful backgrounds in one lifetime, in a way that's almost impossible anywhere else in the world. We're going to have--I think the next decade is going to be a decade of honest conversation and honest, open decisions on a huge scale. I think we'll fix the entitlements. I think we'll have a dramatic expansion of small business, which is where the jobs are. I think you will see an explosion of new breakthroughs in energy. And, and I'm an optimist about where we're going to get over a 10-year-period. But it's going to take a very open, very tough-minded approach.

MS. MITCHELL: I'm an optimist as well. And I think when you look at what the problems are in China--remember, it was an only--only a year or so ago that we had all of those products coming from China that were toxic. They can't do simple things. They can't handle protecting a school building from a devastating earthquake. There is huge anger and resentment building up in that society. They have a lot of problems. The agrarian movement is not complete. So they have a lot of things that they have to fix. And I think our system of democracy is exactly that self-correcting system.

MR. GREGORY: But there's also--there's another piece that has to be addressed, and that is national security, Governor. If the aughts or whatever--what--do we--have we agreed what we call these years? I...

MS. MITCHELL: Not the aughts.

MR. GREGORY: I'm glad we've moved on, because I haven't figured that out.

GOV. PATRICK: Yeah, right.

MR. GREGORY: But, but this first decade of the 21st century, defined by terrorism, two wars. And as we move beyond that, I always said it was President Bush who, who wrote chapter one of the war on terror, and now it will be President Obama who writes the second, although he's not calling it that. How will this next decade be defined by this struggle against terrorists, this war on terrorists which continues on multiple fronts?

GOV. PATRICK: Well, I think it, I think it's about vigilance without fear, and, and I do think it very much relates to inherent American optimism, the kind of optimism we've talked about here. We have to be serious and pragmatic and candid with each other about the nature of the risk, but not so much so that we turn ourselves into an island, because that's not who we are. We do look out, and, and we have so much to offer the rest of the, the rest of the world.

MR. GREGORY: Is pragmatism right, in the face of this kind of threat around the world?

REP. GINGRICH: Well, in the--I mean, pragmatism assumes you know what the facts are. I mean, to be pragmatic is to be in touch with reality. We have, we have--the president has two enormous challenges--and this goes back to self-deception. The first is Iran. I mean, it's very clear the Iranians have been lying consistently. It's very clear the Iranians want to get nuclear weapons. It's pretty clear the Iranians--this current dictatorship will use them. This is a much deeper crisis than anything that happened in the last decade.

The second is the very nature of the threat we have --we don't even have a language that'll--you know, I, I would describe the irreconcilable wing of Islam, some of my friends would describe Islamists, in large parts of our current culture that's politically incorrect. So if I said to you normally, "Tell me what, what, what distinguishes the murderer at Fort Hood, the people we arrested in Denver and Detroit and New York, and the five people who were just picked up in Pakistan?" You could say, "Well, they weren't Rotarians." But, but, but it would be politically incorrect to describe the one common characteristic they have, which is they all belong to an irreconcilable wing of Islam which wants to destroy our civilization. Now, until we can have an honest conversation and not be self-deceptive about our enemies, it's pretty hard to design a strategy. And that's why the Afghanistan argument is a subset. It's like debating Guadalcanal in World War II. Nobody has yet laid out the strategy of national security in a world where Iran is going to get nuclear weapons, North Korea has nuclear weapons and we have active enemies in a worldwide basis who want to kill us.

MR. GREGORY: But, Andrea, is there an emerging Obama doctrine to deal with these threats?

MS. MITCHELL: I think the doctrine of engagement on which he campaigned has borne fruit, but it is not perceived yet. I mean, what, what he has done is united the world behind the United States. I'm not going to predict that the security council is going to move in an aggressive way, but they are doing things. The financial--what the Treasury is doing on some of the banking systems, through Dubai and other places against the Iranian elites. There is more divergence of opinion now in Iran than there was a year ago, and so we have to see whether that regime collapses in and of itself. The speaker is correct, it is the biggest single threat, I think, that we face. But the Obama doctrine, I think, is to be solid militarily, but not be aggressive and internationalist in, in, in that sense that we think of the Bush doctrine.

MAYOR BLOOMBERG: The speaker made a point of carving out there is a wing of Islam that is violently anti-American and does not have the same values we do. But most Muslims around the world are God-fearing people just like you and me. Their religion may be different than yours or mine. And I've tried to reach out in New York City; we have a quarter million Muslims in New York City, practicing Muslims, and they certainly aren't anti-America, anti-New York. We talk about--and I think the governor's right, and Andrea and, and the speaker are right, it is the battle on the battlefield, but it's also the battle on the economic field. And what's missing here is a discussion, believe it or not, of the environment. And it has nothing to do with global warming down the road, it is today. We are transferring our wealth to countries around the world who don't agree with us and, in many cases, are funding the very terrorists that we're sending our young men and women out to fight. And sometimes they don't come back or they don't come back alive. And we can't keep doing this. We've got to get, somehow or other, energy independence. And so regardless of whether you're a greenie or not, the bottom line is we cannot keep funding our enemies.

MR. GREGORY: This gets me to the final area of, of discussion here, which I'd like to spend a few minutes on, which is politics and leadership more broadly in the country now as, again, we think about the next decade. Governor Patrick, what is the mood politically in this country right now?

GOV. PATRICK: Sour and angry, as everyone here has acknowledged.

MR. GREGORY: And this is the end of the first year of the Obama presidency, for which there was so much promise.

GOV. PATRICK: Well, and I don't, I don't think it's his fault. I think it has an awful lot to do with a global economic collapse and the, and the hurt that has caused so many individuals and families and businesses and so forth, and the anxiety it's caused everybody else. And that's out there. And I think what we need right now is leadership that is about the greater good and is about the long term, because that, you know, get it now, all about, you know, you're on your own, every man and woman for him or herself, that kind of underpinning of so much of our policy for the last decade, I think, has run its course and hurt us. And that's part of the course correction I think that this president brings.

MR. GREGORY: Speaker Gingrich, that sour mood is one that the Republican Party will try to seize on in 2010, 2012, 2016. Where is conservatism moving, then, in concert with this mood?
REP. GINGRICH: Well, let me say, first of all, I think that the president had an enormous opportunity. If you look at his last campaign stop in Manassas, Virginia, and then you look at the Grant Park speech the night he was elected, there was a, an openness, there was a bipartisanship, there was a transparency. If he had wanted to be an Eisenhower, I think the country would be fundamentally different today. So I think a great deal of the sourness is a function of secret deals, ramming through stimulus with--in a, in a secret way, basically bribing senators, going from "The Audacity of Hope" to the audacity of raw power. And I, I think this has been an enormous problem.
The Republicans face a very different challenge, and, and it's what we faced in '94. They need to be the alternative party, not the opposition party. You, you can't build, ultimately, on bitterness and successfully create a new majority.

MR. GREGORY: Do you fear that's what Republicans are doing now?

REP. GINGRICH: I think, I think it's--so it's a permanent danger, because it's so much easier. I mean, all you have to do is yell "no." Yelling "no" gets you 25 seats in, in 2010. Having an alternative, something like the Contract with America, gets you 50 or 60 seats. Have--yelling "no" probably gets you 48 percent of the presidential campaign of '12, having a genuine alternative may get you to the presidency. It's a fundamentally different question. And I think it's very important for conservatives to understand, people have--people are genuinely worried, and people want leadership that has genuine solutions.

MR. GREGORY: Mayor Bloomberg, you actually wrote, before this president took office, a kind of prescription for him in Newsweek magazine of things that he ought to tackle. As we look ahead in this decade, where he will look ahead to re-election, what does he have to do and accomplish over this term?

MAYOR BLOOMBERG: Well, the governor said it's not his fault. I think that's right. On the other hand, it is his problem. He is the president of the United States, and he's got to keep his--protect his party and he's got to get re-elected, assuming he wants to run in three years. I assume he will. He's got to pull people together. I think Newt is right that there is--it's--he's not an Eisenhower in the sense that he's pulled both sides together. But I would argue that Congress, Newt, is fundamentally different today. Because of redistricting, nobody gets challenged from across the aisle. Fundamental--their challenges are from their flank, so they can't pull together.

You also have this, this instant news cycle, where everybody's got to have an opinion on everything; don't have time to get the facts, don't have time to analyze. And then you have the blogs and the economics of the news business, which if it bleeds, it leads; and if it doesn't bleed, get a knife, because it's the only ways you're going to keep you job or keep your newspaper going. And so we've gone to a sensationalist, instant analysis, unwilling to be subtle and make compromises kind of government, which is very, very dangerous.
Also, incidentally, I think there's still this focus on these ideological issues. We talked around this table, not once did anybody talk about those ideological issues that are so polarizing Congress and keeping them from coming together. We talked about the public wants jobs, the public wants their homes, we, we want an education for our kids, we need to have jobs down the--economy down the future. We didn't talk about those value things that, unfortunately, seem to take over the dialogue from both the left and the right.

MR. GREGORY: Just be a little bit more specific, Andrea, whether we're talking about figures like President Obama or Sarah Palin, who you spent a lot of this year covering as well, as kind of this leading edge of conservatism at the moment. What happens?

MS. MITCHELL: What I noticed when I was out covering Sarah Palin when she was out on the book tour, at 4 and 5 and 6 in the morning on freezing days, when people had been out for hours, camped out with their kids because they wanted to see her, they are so hungry for a symbol for anyone who can give them answers. And in this case, she was just signing books. But there's an anger out there, and I have not seen it since my very first campaign, which was 1968 and George Wallace. And that is the angry populism which is not fact-based, it's just furious at everybody; angry at Democrats, at Republicans. The tea party has higher numbers in our last NBC News/Wall Street Journal poll than either of the other traditional parties. And that is what I think this news cycle which you referred to is feeding into, and that is what does frighten me. This spirit of America is so large and embracing, but there is an angry subtext because of economic dislocation that is very, very worrisome.

MR. GREGORY: And the, the--if -part of what we're talking about here is this energy in the country which is anti-establishment, anti-big institution--whether it's Wall Street, or it's government, or it's, or it's education, or it's the media, mainstream media--what does the president do as the head of the United States government; again, a leader with so much promise, but so much difficulty in terms of harnessing everyone together, what does he do now to lead?

GOV. PATRICK: Well, first off...

MR. GREGORY: To really lead.

GOV. PATRICK: David, if I may. First of all, he's got a, he's got an unprecedented range of problems to deal with. And, and he has, I think, also an unprecedented level, capacity for articulating the spirit that needs to be brought to those problems. And so I think he needs to use the bully pulpit. And I think there are few people as good as he. I think that also affects policy making and the drawing together. I, I, I have agreed, surprisingly, with a lot of what the speaker has had to say today. But I, I, I will say that, that the notion of nonpartisanship or bipartisanship goes both ways. And we have not seen the Congress willing, at least as I perceive it, from the, from the right to reach out and make compromise or even necessarily to engage in the discussion. The president has to lead that, no doubt about it. But when he extends his hand, others have to reach back.

MR. GREGORY: We will leave it there. Thanks to all of you. Happy new year.

MS. MITCHELL: Thank you. Happy new year.

MR. GREGORY: We'll continue this discussion and ask our guests for their predictions in the new year. It's our MEET THE PRESS Take Two Web extra, and it'll be up on our Web site this morning at mtp.msnbc.com.And we'll be right back after this brief station break

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MR. GREGORY: That's all for today. We'll be back next week. Until then, happy holidays and may you have a happy and healthy new year. If it's Sunday, it's MEET THE PRESS.